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Friday 16 January 2015
Friday 16 January 2015
Friday 16 January 2015
Friday 16 January 2015
According to an Ipsos Mori survey for Panorama, 31% of renters or mortgage holders spend more than a third of their household income on payments. Even if your mortgage payments are below this threshold, securing the best possible deal can significantly benefit your family finances and personal wealth.
What Are Your Options After the Introductory Rate?
Many lenders offer introductory rates to attract customers, typically lasting two to five years. After this, the mortgage switches to the lender’s standard variable rate (SVR). At this point, borrowers have three primary options:
Stay on the SVR.
Remortgage with the existing lender.
Remortgage with a new lender.
Staying on the Standard Variable Rate (SVR)
Remaining on the SVR may make sense if:
Costs Outweigh Savings: Remortgaging incurs costs such as valuation fees, legal paperwork, potential exit fees, and early repayment charges. If these costs exceed potential savings, staying put might be more practical.
Short Remaining Term: If your mortgage is nearing the end of its term, the savings from remortgaging may not justify the effort or expense.
Remortgaging with Your Existing Lender
The Mortgage Market Review (MMR) introduced new rules in April 2014 to ensure affordability for borrowers. While these apply to new and remortgaged loans, existing customers seeking better deals without changes to their loan terms benefit from flexibility.
Key Considerations:
Ease of Transition: Existing customers can often access better rates with fewer checks than new customers.
Restrictions Apply: Changes such as increasing the mortgage amount are treated as entirely new applications and subjected to full affordability checks.
Remortgaging with a New Lender
Switching to a new lender could unlock better deals, especially for borrowers in stronger financial positions.
Advantages:
Improved Loan-to-Value (LTV): If you’ve built equity in your home or benefited from property value increases, your new mortgage may represent a smaller percentage of your home’s value. This often qualifies you for better rates.
Negotiation Leverage: Even if you stay with your current lender, knowing what other lenders offer can strengthen your position when negotiating a deal.
Pros and Cons of Remortgaging
Before remortgaging, the golden rule is simple: calculate the total costs and compare them with potential savings.
Costs to Consider:
Valuation and legal fees.
Early repayment and exit fees.
New lender fees, if applicable.
Potential Savings:
Lower interest rates.
Reduced monthly payments.
Better mortgage terms.
Seeking Professional Advice
Navigating the complexities of remortgaging can be daunting. Consulting a qualified financial adviser can help you assess costs, explore deals, and make the best decision for your financial situation.
Protecting Your Financial Stability
Remember: Your home may be repossessed if you do not keep up repayments on your mortgage. Taking the time to review your mortgage options and make informed decisions can provide long-term financial stability.
Additional Resources for Financial Guidance
Explore these resources to better understand your options and make informed financial decisions.
According to an Ipsos Mori survey for Panorama, 31% of renters or mortgage holders spend more than a third of their household income on payments. Even if your mortgage payments are below this threshold, securing the best possible deal can significantly benefit your family finances and personal wealth.
What Are Your Options After the Introductory Rate?
Many lenders offer introductory rates to attract customers, typically lasting two to five years. After this, the mortgage switches to the lender’s standard variable rate (SVR). At this point, borrowers have three primary options:
Stay on the SVR.
Remortgage with the existing lender.
Remortgage with a new lender.
Staying on the Standard Variable Rate (SVR)
Remaining on the SVR may make sense if:
Costs Outweigh Savings: Remortgaging incurs costs such as valuation fees, legal paperwork, potential exit fees, and early repayment charges. If these costs exceed potential savings, staying put might be more practical.
Short Remaining Term: If your mortgage is nearing the end of its term, the savings from remortgaging may not justify the effort or expense.
Remortgaging with Your Existing Lender
The Mortgage Market Review (MMR) introduced new rules in April 2014 to ensure affordability for borrowers. While these apply to new and remortgaged loans, existing customers seeking better deals without changes to their loan terms benefit from flexibility.
Key Considerations:
Ease of Transition: Existing customers can often access better rates with fewer checks than new customers.
Restrictions Apply: Changes such as increasing the mortgage amount are treated as entirely new applications and subjected to full affordability checks.
Remortgaging with a New Lender
Switching to a new lender could unlock better deals, especially for borrowers in stronger financial positions.
Advantages:
Improved Loan-to-Value (LTV): If you’ve built equity in your home or benefited from property value increases, your new mortgage may represent a smaller percentage of your home’s value. This often qualifies you for better rates.
Negotiation Leverage: Even if you stay with your current lender, knowing what other lenders offer can strengthen your position when negotiating a deal.
Pros and Cons of Remortgaging
Before remortgaging, the golden rule is simple: calculate the total costs and compare them with potential savings.
Costs to Consider:
Valuation and legal fees.
Early repayment and exit fees.
New lender fees, if applicable.
Potential Savings:
Lower interest rates.
Reduced monthly payments.
Better mortgage terms.
Seeking Professional Advice
Navigating the complexities of remortgaging can be daunting. Consulting a qualified financial adviser can help you assess costs, explore deals, and make the best decision for your financial situation.
Protecting Your Financial Stability
Remember: Your home may be repossessed if you do not keep up repayments on your mortgage. Taking the time to review your mortgage options and make informed decisions can provide long-term financial stability.
Additional Resources for Financial Guidance
Explore these resources to better understand your options and make informed financial decisions.
